AirBNB in Oklahoma City by OU Medical Center

[Ben Scott]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $98,000
Cash invested: $36,000

I sold a previous rental property and used the $36k proceeds as a downpayment on this home using a 1031 Exchange. This home had already been remodeled and was in great shape. But it wouldn't sell! Reason: the buyers were FHA and there is a loft above the garage that serves as a third bedroom. Appraisers would not give credit for that square footage due to the ladder to access the room being too steep. So I got a fairly good deal.

What made you interested in investing in this type of deal?

My New Year's Resolution was to operate an AirBNB just to experience that versus a typical rental property

How did you find this deal and how did you negotiate it?

I found this deal on the MLS. The home had gone under contract several times but fell through due to appraisal. So I got a fairly good deal. The seller was using the home as an AirBNB so it was fully furnished with a washer/dryer. I asked for all the appliances and furniture as part of the deal.

How did you finance this deal?

I used funds from a previous sale with a 1031 exchange. I did a 15-year note on the difference.

How did you add value to the deal?

We've upgraded some of the furniture and furnishings in the home.

What was the outcome?

The AirBNB is profitable so far six months in! I average about $300 a month cash flow. Average proceeds are $1250 and monthly expenses are $950

Lessons learned? Challenges?

Maintaining an AirBNB is much more work than managing a typical rental.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I'm a licensed agent and found and purchased myself

[Ben Scott]

Thanks, Alyssa! I saw an initial drop in March since so many events were cancelled abruptly (Cher concert, OKC marathon, etc). Some guests had booked the home for a planned surgery. But when non-essential medical procedures were cancelled, those folks cancelled their stay. For about a month, we had guests that seemed to be between housing situations which wasn't the best. But the quality of guest picked up in May. 

I require a two-day minimum. So not counting the single days of vacancy between stays to clean the property, the home was vacant:

5 days in March

8 days in April

3 days in May

0 days in June (one gentleman rented the home for the whole month) 

Monthly profit:

March : $102

April: $208

May: $172

June: $318